Ai does have a problem with obstruction distortion, but I'm pretty sure when it comes to long unobstructed torso/limbs a few of the images have, it is because they are generating the images in too wide an aspect ratio.
Ai (at least the basic stablediffusion I have used, which output looks similar to this) usually outputs proper proportions at specific aspect ratios, apparently it is usually best to start at a small ratio and then upscale it afterwards. 512 by 512 is the basic ratio to use, then when the image is generated, you use an upscaler to enlarge and/or add more detail.
I'm not extremely knowledgable about the specifics, so I won't go into more details I may be wrong about.
In regards to the quality of the ai images, they are what I would expect of an older ai cg game (at least judging by the preview images, only a couple are passable, the rest have obvious flaws), putting such messy low quality ai images doesn't say positive things about the future of this game.